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February 20,
2009
Mortgage Rescue Eligibility
Still Being Finalized
A day after President Obama unveiled his $75 billion
foreclosure prevention program, administration officials yesterday said
they were still determining which homeowners should qualify, the
size='3'>Washington Post reported today. The
administration is developing a standard for lenders to use in evaluating
applicants that seeks to exclude homeowners who are not in real need or
are too far behind in their payments to be saved. Officials have set
some conditions for eligibility, including requiring that borrowers'
mortgage payments consume more than 38 percent of their income and that
the property be a primary residence. Government officials are working to
finalize details before a self-imposed March 4 deadline when the program
will go into effect and lenders are likely to be flooded with
calls.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/19/AR2009021903120_pf.html'>Read
more.
In related news, a panel of experts gathered on CNBC
yesterday to share their views and assess the Obama administration's
housing plan. The panel included Heather Boushey of Center for American
Progress, Phil Kerpen of Americans for Prosperity and CNBC’s Rick
Santelli.
href='http://www.cnbc.com/id/15840232?video=1040518084'>Click
here to watch the segment.
Analysis: U.S. Government
Tries a Trillion-Dollar Key for Locked Lending
The U.S. government has been making every effort to
reverse the drastic contraction that has taken place in the current
economic downturn to free up the amount of credit available throughout
the economy, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. By one estimate, as much as $1.9 trillion of
lending capacity — the rough equivalent of half of all the money
borrowed by businesses and consumers in 2007, before the recession
struck — has been sucked out of the system. Banking chiefs, who
have come under sharp criticism for not making more loans even as they
have accepted billions of taxpayer dollars to prop themselves up, say it
is the markets, not the banks, that are squeezing American borrowers. In
response, the Treasury Department and the Federal Reserve plan to spend
as much as $1 trillion to provide low-cost loans and guarantees to hedge
funds and private equity firms that buy securities backed by consumer
and business loans. The Fed is expected to start the first phase of the
program, which will provide $200 billion in loans to investors, in early
March. Investors and bankers say the Treasury program, called the Term
Asset-Backed Securities Loan Facility could help unclog vital channels
of capital, but they add that it is hard to know how big an impact it
will have.
href='http://www.nytimes.com/2009/02/20/business/20lend.html?ref=business&pagewanted=print'>Read
more.
More Charities Seeking
Bankruptcy Protection
Nonprofits are feeling the effects of the economic
downturn as groups ranging from cultural institutions to social service
agencies have filed for bankruptcy to reorganize or liquidate over the
past six months, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. While no one has compiled data on how many
charities have turned to the courts for protection, experts in the field
say it has become more common as nonprofits have been pressured by
donors to operate more like businesses. Performing arts groups typically
are the nonprofits hit first in economic downturns, as donors devote
more of their giving to charities that address basic needs and consumers
cut spending on entertainment. Groups like the Baltimore Opera Company
and the Spartans Drum and Bugle Corps in Nashua, N.H., are either
reorganizing under bankruptcy protection or simply going out of
business.
href='http://www.nytimes.com/2009/02/20/us/20bankrupt.html?ref=business&pagewanted=print'>Read
more.
Polaroid Receives Court
Approval to Sell Assets
Bankruptcy Judge
face='Times










New
Roman'
size='3'>Gregory Kishel approved Polaroid
Corp.’s request to auction itself off in March, the Associated
Press reported yesterday.Luxembourg-based private-equity firm Genii
Capital is listed as the stalking horse buyer through its affiliate
PHC Acquisitions LLC, according to a document Wednesday from U.S.
Bankruptcy Court in Minnesota.The firm offered $42 million for Polaroid
in January. Judge Kishel set a due date for competing bids on March 26
with an auction following on March 30.
href='http://finance.yahoo.com/news/Polaroid-wins-bankruptcy-apf-14414917.html'>Read
more.
WL Homes Seeks Bankruptcy,
Cites Market Collapse
WL Homes LLC, a 161-year-old homebuilder, filed
for chapter 11 protection from creditors with plans to focus on luxury
developments in Southern California, Bloomberg News reported yesterday.
The company blamed its filing on the collapse of the real estate market,
saying its sales last year had fallen by about half from 2007. The
company listed assets of more than $1 billion and debt of $500 million
to $1 billion in chapter 11 documents filed today in U.S. Bankruptcy
Court in Wilmington, Delaware. The case is
face='Times










New
Roman'
size='3'>In re WL Homes LLC, 09-10571, U.S.
Bankruptcy Court, District of Del. (Wilmington).
href='http://www.bloomberg.com/apps/news?pid=20601206&sid=aMf9C.W61Mns'>Read
more.
New York AG Subpoenas Bank
of America’s CEO over Merrill Lynch Deal
Bank of America Chairman and CEO Kenneth Lewis was
issued a subpoena by New York State Attorney General Andrew Cuomo, who
is investigating whether the bank withheld information from investors in
violation of state law, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Cuomo's office is trying to determine if
investors were misled about the depth of Merrill's losses in late 2008
and whether details of the bonuses to Merrill employees, contained in a
nonpublic document, should have been disclosed to investors.
Investigators also took testimony from former Merrill CEO John Thain
yesterday. In particular, they wanted to know why the September merger
agreement contained a nonpublic attachment that outlined the maximum
Merrill could pay.
href='http://online.wsj.com/article/SB123509642439429175.html?mod=testMod'>Read
more. (Subscription required.)
Court Approves Lehman
Examiner's Plan
Bankruptcy Judge
face='Times










New
Roman'
size='3'>James M. Peck on Wednesday approved
the work plan submitted by the examiner in the chapter 11 bankruptcy of
Lehman Brothers Holdings Inc., which calls for a final report in nine
months and projects a cost of $23 million,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported yesterday.
Judge Peck approved the work plan submitted by examiner Anthony Valukas,
who is investigating movement of funds between what was once the
country's fourth-largest investment bank and its subsidiaries in the
days after its collapse. However, in case witnesses do not cooperate,
Valukas filed a motion last month asking for broad authority to issue
subpoenas. The judge has not yet ruled on that motion.
href='http://bankruptcy.law360.com/articles/88082'>Read
more. (Subscription required.)
California Reaches Budget
Deal
California legislators yesterday passed a budget that
closes a $42 billion hole, the worst state budget shortfall in U.S.
history, the
size='3'>Washington Post reported today. Many
state offices will still be shuttered Friday, in keeping with
Schwarzenegger's decision to furlough all 238,000 state employees two
days a month. The budget deal calls for $1.4 billion in savings from
employee compensation, and negotiations are underway with unions that
will help determine how to achieve the savings. While some of the issues
are unique to California, nearly all states are feeling pressure from
falling revenue and rising costs as tax collections decline and demand
for services increases. At least 46 states are facing shortfalls this
year or next, and the combined budget gaps are estimated to total more
than $350 billion, according to the Center on Budget and Policy
Priorities.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/19/AR2009021900462_pf.html'>Read
more.
Bankruptcy
Saab, the Swedish maker of sports cars and sedans,
filed for bankruptcy today after it was cut loose by General Motors as
part of the American company’s sweeping restructuring plan,
the
size='3'>New York Times reported today.
Unmoored from its parent, Saab went to a Swedish court for protection
from its creditors, and said that the company would — with
assistance from the Swedish government — reorganize to pave the
way for private investors to buy all or part of the company. Saab lost
about 3 billion Swedish crowns or U.S. $343 million, in 2008 and said it
would lose a similar amount this year.
href='http://www.nytimes.com/2009/02/21/business/worldbusiness/21saab.html?_r=1&pagewanted=print'>Read
more.
UBS for 52,000 Names in Tax-evasion Inquiry
The U.S. Justice Department is seeking to compel
Switzerland-based bank UBS to divulge the identities of 52,000 Americans
whom the authorities suspect of using secret offshore accounts at the
bank to dodge taxes, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The move opened a new, unexpected front against
UBS, which a day earlier had agreed to pay $780 million to settle claims
that it defrauded the Internal Revenue Service, and against
Switzerland’s long tradition of banking secrecy. The number of
clients the authorities are seeking to identify is far higher than
previously believed, raising new questions about the scale of
UBS’s activities and the number of Americans who could be snared
in the investigation.
href='http://www.nytimes.com/2009/02/20/business/worldbusiness/20ubs.html?ref=business&pagewanted=print'>Read
more.
SEC to Examine Boards'
Role in Financial Crisis
Securities and Exchange Commission Chairman Mary
Schapiro plans to look into whether the boards of banks and other
financial firms conducted effective oversight leading up to the
financial crisis, the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Schapiro is also considering asking boards to
disclose more about directors' backgrounds and skills, specifically how
much they know about managing risk.The inquiry into what went wrong at
the board level comes as the SEC's Schapiro plans a broader review of
policies governing how much shareholders can influence boards. She
previously has expressed support for proxy access, which would make it
easier for shareholders to propose new directors.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/02/19/AR2009021903172_pf.html'>Read
more.
Khuzami to Lead SEC
Enforcement Division
Former federal prosecutor Robert Khuzami is the
Securities and Exchange Commission's new top cop, as expected, joining
the agency's enforcement division at a time when it is under fire for
how it pursues financial fraud, the
face='Times










New
Roman'
size='3'>Wall Street Journal reported today.
As a federal prosecutor, Khuzami prosecuted white-collar securities
crime, insider trading and accounting and financial-statement fraud. He
headed a securities and commodities fraud task force for three
years.
href='http://online.wsj.com/article/SB123508426606527305.html'>Read
more. (Subscription required.)
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